As treaties and trade agreements are implemented this year, more U.S. companies are looking at the Association of Southeast Asian Nations for fresh business opportunities. Fortunately, a whole host of logistics and transportation service providers are laying the groundwork to overcome inherent infrastructure challenges.

Today, U.S. trucking companies face more regulations than any time in history—and they claim this “regulatory tsunami” is putting the clamp on U.S. productivity. During this session shippers will gain a better understanding of the current state of trucking regulations (HOS & CSA) and the impact they're having on capacity and rates.

These results come from a year that was unusual in many respects for the Netherlands-based 3PL in that it completed a major agreement with its major note holders to recapitalize its balance sheet and raise new capital in the first half of 2013. Former CEVA CEO Marv Schlanger said at the time that these efforts will make for a stronger balance sheet for CEVA, which will enable the company to grow faster and better compete in the logistics and supply chain marketplace, as well as give CEVA the flexibility of making additional capex investments, which will allow it to better serve its customers as they grow globally and build and sell new supply chain products.

Fourth quarter revenue for CEVA-at $2.149 billion-dropped 9.4 percent annually, while adjusted EBITDA jumped up 57.1 percent to $77 million, with the company citing cost reduction actions taken last year contributing to ongoing annual improvements for the latter.

“The results of the team’s efforts in addressing underperforming contracts in our Contract Logistics business significantly increased the company’s adjusted EBITDA compared to a year ago,” said CEVA’s new CEO Xavier Urbain in a statement. “We are also seeing evidence of improvement in our Freight Management business as actions to strengthen our Freight Management organization gain traction in the marketplace and with our customers.”

For 2013, CEVA revenue fell 8.3 percent year-over-year to $8.517 billion, due to sluggish volumes from its Freight Management group, as Freight Management revenue dropped 12 percent due to low airfreight volumes out of Asia, coupled with the company’s recapitalization in the first half of 2013. And the company said that while U.S. Automotive and European Consumer and Retail sector performance was solid it was offset by the company’s focus on underperforming contracts.

Due to the recapitalization efforts, CEVA said it cut its net debt to $1.551 billion, down more than 50 percent compared to $3.301 billion in 2012.

CEVA CFO Rubin McDougall told LM that the big picture for CEVA in this release is that in 2013 CEVA had a “revenue challenge” largely because of the recapitalization, which caused a lot of noise in the market, with competitors using that to their advantage in marketing collateral.

“The recapitalization in our opinion is becoming ancient history and no longer an issue, with our customers seeing it as the good news that it is,” he explained. “But is still had an impact in the fourth quarter as many of our customers, particularly in Freight Management, do their contracts on an annual basis and some are not in yet because of the recapitalization. As we look at that, it is a price we have to pay in doing it, which was absolutely the right thing for the business.”

And on the earnings side, McDougall said there are things CEVA can move on independent of the recapitalization, including management processes and discipline and focusing on its business segments.

“What we said with Contract Logistics was that we needed to make it the stable, growing, and predictable business we know it can be,” he said. “We first focused on the underperforming contracts as a percentage of the portfolio. If certain contracts are not making money or minimal money, we need to either improve them or get out of them. And we also knew we needed to have a more robust process for bringing in new business. We did this by improving the quality of reviews we did on the solutions side for both IT and commercial reviews to make sure we have the right processes in place for onboarding new contracts to make it better for the customer and better for us and we think that is evident in our results.”

On the Freight Management side, McDougall said CEVA knew the recapitalization would have an impact, because with such a major initiative being undertaken it was reasonable to expect customer apprehension.

And aside from the recapitalization, he said CEVA knew there were Freight Management-related areas it needed to be investing in, including a better tender management process, which analyze customer portfolios for things like lane pricing and customer-focused options, and a bigger team.

“We doubled the resources for this and put more management in to improve that and also knew we needed a more robust product team, especially with more leadership on air and ocean, and we took steps to provide those teams with a better solution,” he said. “Trade lane resources were another focus in that this directs business development resources to ensure freight to meet certain specific characteristics for things like specific volume and density so that it is profitable.”

The resources CEVA made in 2013 in conjunction with the recapitalization complete have made the competitive position for CEVA’s Freight Management business as good as it has ever been, according to McDougall, who added there have been encouraging signs from the current rounds of tenders even though it was challenged in the fourth quarter.

Richard Armstrong, founder of supply chain consultancy Armstrong and Associates said that the positive steps CEVA has taken since its recapitalization should be viewed as good news.

“CEVA is one of the important [global 3PLs],” he said. “The profit improvements should allow them to make investments in critical areas that will make them even better and benefit their customers.”

About the Author

Jeff BermanGroup News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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